The basic motto of those involved in the stock market is “buy low, sell high”. This is great advice, for those who buy and sell stocks. However, the average person that holds a job doesn’t have the time to study the stocks and watch the market every day. So what should they do? If you’re self managing your IRA portfolio then you may want to consider the buy and hold approach. When talking about dividend stocks the buy low, sell high can still be a factor.
However, you may want to consider a few things. You can buy the stock when it looks like it is at a low point and hold on to it for the long term. The stock could go up and so may the dividends. You can buy the stock at its present price and it may go down and so may the dividends. Another strategy would be to buy the stock with the understanding it will go up and down, and you keep it no matter which happens. There are no guarantees with the stock market. When self managing your account set stop limits to protect yourself.
Keep in mind that the dividend will be paid regardless of the stock going up or down, unless the company goes bankrupt. How much you’re willing to see it go down will be based on your own tolerance. On the flip side of that is, how much will it go up before you want to sell it and then wait for it to go down to buy back in? There are several factors to consider, but when you’re thinking long term, and you don’t have the time to sit and watch your stocks, you’re best option is, to buy the stock, set a fair stop limit, and reap the dividends.
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